# Commissioner of Income Tax Exemption U.P. State Cons. & Infra v. M/s Reham Foundation Kandhari Lane Lal Bagh Lucknow

- **Citation:** (2019) 2 ILRA 1151
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2019-09-26
- **Case number:** Income Tax Appeal No. 37 of 2017
- **Bench:** Munishwar Nath Bhandari, Mrs. Sangeeta Chandra, Manish Mathur
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/commissioner-of-income-tax-exemption-u-p-state-cons-infra-v-m-s-reham-44571
- **Pages:** 13

## Headnote

A. Income Tax Act, 1961- Sections 11,
12, 12 AA, 254, 260 (A) - Tribunal can
pass order directing Commissioner to
grant registration, if satisfied with the
material already on record - To decide
contradictory views of regarding the
issue - whether Income Tax Appellate
Tribunal while hearing Appeal in a
matter where registration U/S 12 AA has
been denied by Commissioner, can itself
pass an order directing Commissioner to
grant registration or should leave the
matter to be considered afresh by
Commissioner, giving rise to further
litigation - matter has been referred to
Full Bench- Answering the reference, the
High Court held-An appeal before the
Tribunal is a continuation of original
proceedings-The words "as it thinks fit"
used in relation to the power of the
Income Tax Appellate Tribunal in Section
254(1) are of widest amplitude and
confer very wide jurisdiction on the
appellate authority- Where the words of
Statute are clear without any ambiguity,
there is no scope for the courts to
1152 INDIAN LAW REPORTS ALLAHABAD SERIES
innovate or alter statutory provisions by
breathing into the provision words which
have not been incorporated by the
legislature. (Para 12, 13, 17, 18, 19 & 20)
B. Income Tax Act, 1961-Section 254 and
Section 12(AA) - Power of Appellate
Tribunal are co-extensive with the power
of the Commissioner u/s 12 (AA) - Powers
given under S. 254 have to be read along
with other provisions of the Income Tax
Act - Section 12AA requires satisfaction
about the genuineness of the activities and
the object of the Trust to be recorded
before its registration. (Para 23 & 31)
C. Remand would be necessary when
Tribunal records satisfaction on the basis of
material
not
available
before
the
Commissioner and where the application has
been rejected on technical ground. (Para 31)
Reference before Full Bench vide order dated
18.01.2019, passed by Division Bench in the
case
of
Commissioner
of
Income
Tax
Exemption
U.P.
State
Construction
and
Infrastructure Vs. M/s Reham Foundation
Kandhari Lane, Lal Bagh, Lucknow.

Income tax disposed of (E-4)

Precedent followed: -

## Text

_Characters 0–39,714 of 43,168. This is a partial read: ask again with offset=39714 for what follows._

2 All. Commissioner of Income Tax Exemption U.P. State Cons. & Infra Vs M/s Reham
 Foundation Kandhari Lane Lal Bagh Lucknow

1151
of interest. The Tribunal had awarded
interest at the rate of 12% p.a. but the
same had been too high a rate in
comparison
to
what
is
ordinarily
envisaged in these matters. The High
Court,
after
making
a
substantial
enhancement in the award amount,
modified the interest component at a
reasonable rate of 7.5% p.a. and we find
no reason to allow the interest in this
matter at any rate higher than that
allowed by High Court."

22. In view of the above, the appeal
is partly allowed. Judgment and decree
passed by the Tribunal shall stand
modified to the aforesaid extent. The
amount be calculated and deposited with
interest at the rate of 7.5% from the date
of filing of the claim petition till the
amount is deposited. The amount be
deposited within a period of 12 weeks
from today.

23. As far as the claimants of F.A.F,O
No.3189 of 2003 who are the heirs of Prem
Singh and who had preferred M.A.C.P. No.
45 of 2000 can recover the amount from any
of the tort-fessor as Prem Singh was a pillion
rider and the insurance company may recover
10 per cent from the insurance company and
owner of the scooter. F.A.F. No. 3188 of 2003
the owner and the insurance company of the
Tatasumo to deposit 90 per cent of the
awarded amount as driver Jagmohan is held to
be 10 per cent negligent and that amount will
have to be deducted.

24. The record and proceedings be
send back to the Tribunal forthwith.
----------

(2019)10ILR A 1151

APPELLATE JURISDICTION
CIVIL SIDE
DATED: LUCKNOW 26.09.2019

BEFORE

THE HON'BLE MUNISHWAR NATH
BHANDARI, J.
THE HON'BLE MRS. SANGEETA CHANDRA, J.
THE HON'BLE MANISH MATHUR, J.

Income Tax Appeal No. 37 of 2017

Commissioner of Income Tax Exemption
U.P. State Cons. & Infra. ...Appellant
Versus
M/s Reham Foundation Kandhari Lane
Lal Bagh Lucknow ...Respondent

Counsel for the Appellant:
Sri Manish Mishra

Counsel for the Respondent:
Sri Sidharth Dhaon

A. Income Tax Act, 1961- Sections 11,
12, 12 AA, 254, 260 (A) - Tribunal can
pass order directing Commissioner to
grant registration, if satisfied with the
material already on record - To decide
contradictory views of regarding the
issue - whether Income Tax Appellate
Tribunal while hearing Appeal in a
matter where registration U/S 12 AA has
been denied by Commissioner, can itself
pass an order directing Commissioner to
grant registration or should leave the
matter to be considered afresh by
Commissioner, giving rise to further
litigation - matter has been referred to
Full Bench- Answering the reference, the
High Court held-An appeal before the
Tribunal is a continuation of original
proceedings-The words "as it thinks fit"
used in relation to the power of the
Income Tax Appellate Tribunal in Section
254(1) are of widest amplitude and
confer very wide jurisdiction on the
appellate authority- Where the words of
Statute are clear without any ambiguity,
there is no scope for the courts to
1152 INDIAN LAW REPORTS ALLAHABAD SERIES
innovate or alter statutory provisions by
breathing into the provision words which
have not been incorporated by the
legislature. (Para 12, 13, 17, 18, 19 & 20)
B. Income Tax Act, 1961-Section 254 and
Section 12(AA) - Power of Appellate
Tribunal are co-extensive with the power
of the Commissioner u/s 12 (AA) - Powers
given under S. 254 have to be read along
with other provisions of the Income Tax
Act - Section 12AA requires satisfaction
about the genuineness of the activities and
the object of the Trust to be recorded
before its registration. (Para 23 & 31)
C. Remand would be necessary when
Tribunal records satisfaction on the basis of
material
not
available
before
the
Commissioner and where the application has
been rejected on technical ground. (Para 31)
Reference before Full Bench vide order dated
18.01.2019, passed by Division Bench in the
case
of
Commissioner
of
Income
Tax
Exemption
U.P.
State
Construction
and
Infrastructure Vs. M/s Reham Foundation
Kandhari Lane, Lal Bagh, Lucknow.

Income tax disposed of (E-4)

Precedent followed: -

1. Shiv Shakti Coopve. Housing Society Vs
Swaraj Developers & ors., (2003) 6 SCC 59
(Paras 12, 16)
2. Bharat Aluminium Co. Vs Kaiser Aluminium
Technical Services Ltd. Inc., (2012) 9 SCC 552
(Para 14)
3. Commissioner of Customs (Import) Vs Dileep
Kumar & Co. & ors., (2018) 9 SCC 1 (Para 15)
4. Babu Lal Nagar Vs Shri Synthetics Ltd. &
ors., (1984) Supp. SCC 128 (Para 19)
5. Clariant International Ltd. & anr. Vs
Securities & Exchange Board of India, (2004) 8
SCC 524 (Para 21)
(Delivered by Hon'ble Manish Mathur, J.)

1. This Full Bench has been
constituted in terms of the reference order
dated 18.01.2019 passed by Division
Bench in the case of Commissioner of
Income Tax Exemption U.P. State
Construction and Infrastructure vs. M/s.
Reham Foundation Kandhari Lane,
Behind Islamia College, Lal Bagh,
Lucknow vide order dated 18.01.2019.
The questions referred are as folllows:-

"(i)
Whether
Income
Tax
Appellate Tribunal while hearing Appeal
in a matter where registration under
Section 12AA has been denied by
Commissioner Income Tax can itself pass
an order directing Commissioner to grant
registration or should leave the matter to
be considered by Commissioner Income
Tax to consider matter afresh giving rise
to further litigation in the matter;

(ii)
Whether
co-extensive
Appellate jurisdiction conferred upon
Income Tax Appellate Tribunal being a
last court of fact can be read to confer
upon it similar powers as been exercised
by authorities below whose orders are
considered in Appeals by Tribunal."

2. It was on an Appeal preferred by
the Revenue under Section 260 (A) of
Income Tax Act, 1961 (hereinafter
referred to as ''the Act of 1961'). The
Appeal was preferred to challenge the
order of the Income Tax Appellate
Tribunal, which directed registration of
the Trust under Section 12AA (1)(b) of
the Act of 1961 within a period of sixty
days, failing which it would deemed to
have been registered. The challenge to
said direction was made by the Revenue
in reference to the judgment of the
Division Bench in Income Tax Appeal
No. 112 of 2013: Commissioner of
2 All. Commissioner of Income Tax Exemption U.P. State Cons. & Infra Vs M/s Reham
 Foundation Kandhari Lane Lal Bagh Lucknow

1153
Income Tax, Meerut vs. M/S. A.R. Trust
Meerut decided on 04.09.2017 wherein it
was held that the Income Tax Appellate
Tribunal
itself
cannot
direct
for
registration of a Trust, without recording
satisfaction,
as
contemplated
under
Section 12AA of the Act of 1961.

3. Learned counsel for the Revenue
submits that power for registration of a
Trust or an Institution under Section
12AA of the Act of 1961 has been given
to the Commissioner. Those powers
cannot be exercised by the Tribunal. If at
all on the scrutiny of the case in Appeal, a
case is made out for registration of a
Trust, it needs to be remanded back to the
Commissioner.
The
direction
for
registration of the Trust under Section
12AA of the Act of 1961 cannot be given
by the Tribunal itself. It is for the reason
that registration of the Trust under Section
12AA of the Act of 1961 is subject to the
satisfaction of the Commissioner about
the genuineness of activities of the Trust.
In absence of recording of satisfaction of
the Commissioner about the object and
activities of a Trust, a direction for
registration would be illegal. It is for that
reason alone, the Division Bench of this
Court in the case of M/s. A.R. Trust
Meerut (supra) caused interference in the
order of the Tribunal, where direction was
given for registration of the Trust within a
period of sixty days.

4. In the subsequent judgment in the
case
of
M/s.
Yamuna
Expressway
Industrial Development Autority (supra),
a divergent view was taken by the Court.
If a direction for registration of a Trust is
given without recording satisfaction, it
would be opposed to Section 12AA of the
Act of 1961. The prayer is accordingly to
answer the Reference against the assessee
and in favour of the Revenue. It is after
holding that the Appellate Tribunal is not
competent to direct for registration of a
Trust under Section 12AA of the Act of
1961, rather it should remand the case to
the Commissioner for the aforesaid.

5. The argument raised by learned
counsel for the Revenue has been opposed
by learned counsel appearing for the
assessee. It is submitted that after the
rejection of an application for registration
of a Trust under Section 12AA of the Act
of 1961, if refusal is without considering
any material, then on Appeal, after
considering the issue and recording
satisfaction, the Tribunal can direct for
registration of the Trust. It is not only for
the reason that such power exists with the
Tribunal pursuant to Section 254 of the
Act of 1961 but even to take the order of
the Tribunal to its logical conclusions.

6. It is stated that if application for
registration
is
rejected
by
the
Commissioner after recording a perverse
finding then on an Appeal, it can be
corrected after taking a proper view and
recording satisfaction, as required under
Section 12AA of the Act of 1961, to
direct for registration of the Trust. If the
required satisfaction is recorded by the
Appellate Tribunal, then remand of the
matter would be nothing but an empty
formality, as the Commissioner cannot
take a view different then taken by the
Appellate Tribunal. The registration of the
Trust needs to be granted if the Appeal is
allowed by the Tribunal after recording its
satisfaction, as required under Section
12AA of the Act of 1961. In view of
above, the Tribunal can itself issue a
direction for registration of the Trust. The
1154 INDIAN LAW REPORTS ALLAHABAD SERIES
Tribunal can even remand the case in
given
circumstance
when
the
Commissioner has rejected the application
on
hyper
technical
grounds
and
interference therein is made. The matter
can
be
remanded
back
to
the
Commissioner to record its satisfaction, as
required under Section 12AA of the Act
of
1961.
In
view
of
above,
the
adjudication of the issue before the
Tribunal can be with a direction to
register the Trust under Section 12AA of
the Act of 1961 or remand of the case.
The prayer is to answer the Reference
holding that Tribunal is having powers to
direct for registration of a Trust under
Section 12AA of the Act of 1961 or to
remand the case to the Commissioner to
record its satisfaction, as required under
the Act. The direction of the Tribunal for
registration of the Trust would however to
be on recording such satisfaction and not
otherwise. The prayer is accordingly to
answer the Reference by holding that
Appellate Tribunal is having the power to
direct for registration of the Trust or
alternatively to remand the case to the
commissioner.

7. In counter, the counsel for the
assessee has relied upon the judgment of
Division Bench in the case of Income Tax
Appeal No. 107 of 2016: Commissioner
of Income Tax (Exemption), Lucknow vs.
M/s.
Yamuna
Expressway
Industrial
Development
Authority,
decided
on
21.04.2017. In the said case, the Division
Bench held that powers of the Tribunal
are
co-extensive
to
that
of
the
Commissioner under Section 12AA of the
Act of 1961. Thus, it can direct for
registration of a Trust/Institution. A
reference of Section 254 of the Act of
1961 was given to show power of the
Tribunal. The Division Bench therein
found the Tribunal to be competent to
direct for registration of a Trust. Taking
into consideration the conflicting view,
now we need to decide the questions
raised before us and otherwise quoted
herein above.

8. We have considered the rival
submission of the parties and perused the
record.

9. The issue before the larger Bench
is in reference to Section 12AA of the Act
of 1961, thus, it would be gainful to refer
the provisions aforesaid. It is quoted
hereunder for ready reference:-

"Procedure for registration.

12AA.
(1)
The
Principal
Commissioner
or
Commissioner,
on
receipt of an application for registration
of a Trust or institution made under
clause (a) or clause (aa) or clause (ab) of
sub-section (1) of Section 12A, shall--

(a) call for such documents or
information from the Trust or institution
as he thinks necessary in order to satisfy
himself about the genuineness of activities
of the Trust or institution and may also
make such inquiries as he may deem
necessary in this behalf; and

(b) after satisfying himself about
the objects of the Trust or institution and
the genuineness of its activities, he--

(i) shall pass an order in writing
registering the Trust or institution;

(ii) shall, if he is not so satisfied,
pass an order in writing refusing to
register the Trust or institution,

and a copy of such order shall
be sent to the applicant:

Provided that no order under
sub-clause (ii) shall be passed unless the
applicant has been given a reasonable
opportunity of being heard.
2 All. Commissioner of Income Tax Exemption U.P. State Cons. & Infra Vs M/s Reham
 Foundation Kandhari Lane Lal Bagh Lucknow

1155

(1A) All applications, pending
before the Principal Chief Commissioner
or Chief Commissioner on which no order
has been passed under clause (b) of subsection (1) before the 1st day of June,
1999, shall stand transferred on that day
to
the
Principal
Commissioner
or
Commissioner
and
the
Principal
Commissioner or Commissioner may
proceed with such applications under that
sub-section from the stage at which they
were on that day.

(2) Every order granting or
refusing registration under clause (b) of
sub-section (1) shall be passed before the
expiry of six months from the end of the
month in which the application was
received under clause (a) or clause (aa)
or clause (ab) of sub-section (1) of section
12A.

(3) Where a Trust or an
institution has been granted registration
under clause (b) of sub-section (1) or has
obtained registration at any time under
section 12A [as it stood before its
amendment by the Finance (No. 2) Act,
1996 (33 of 1996)] and subsequently the
Principal Commissioner or Commissioner
is satisfied that the activities of such Trust
or institution are not genuine or are not
being carried out in accordance with the
objects of the Trust or institution, as the
case may be, he shall pass an order in
writing cancelling the registration of such
Trust or institution:

Provided that no order under
this sub-section shall be passed unless
such Trust or institution has been given a
reasonable opportunity of being heard.

(4) Without prejudice to the
provisions of sub-section (3), where a
Trust or an institution has been granted
registration under clause (b) of subsection (1) or has obtained registration at
any time under section 12A [as it stood
before its amendment by the Finance (No.
2)
Act, 1996
(33
of
1996)]
and
subsequently it is noticed that the
activities of the Trust or the institution are
being carried out in a manner that the
provisions of sections 11 and and 12 do
not apply to exclude either whole or any
part of the income of such Trust or
institution due to operation of sub-section
(1) of section 13; then the Principal
Commissioner or the Commissioner may,
by an order in writing, cancel the
registration of such Trust or institution:

Provided that the registration
shall not be cancelled under this subsection, if the Trust or institution proves
that there was a reasonable cause for the
activities to be carried out in the said
manner."

10. A perusal of Section 12AA of
the Income Tax Act shows that the
Principal
Commissioner
or
the
Commissioner,
on
receipt
of
an
application for registration of a Trust or
an institution, may call for such document
or information as he thinks necessary to
satisfy himself about the genuineness of
the activities of the Trust or the
Institution, as it deems necessary. After
calling for such an information and
satisfying himself about the object and
genuineness of the activities of the Trust,
he shall pass an order for registering the
Trust or the Institution or in the alternate,
refuse such registration. In view of the
aforesaid provision, the registration of the
Trust is subject to satisfaction of the
Commissioner,
not
only
over
the
genuineness of the activities of the Trust,
but also about the objects of the Trust or
the Institution. In view of above, the
registration
of
the
Trust
requires
1156 INDIAN LAW REPORTS ALLAHABAD SERIES
satisfaction of the Commissioner. In case
the Commissioner is satisfied with the
genuineness of the activities and even the
objects, he can register the Trust under
Section 12AA of the Act of 1961 and in
case the Commissioner is not satisfied or
refuses registration, then the Appeal lies
to the Tribunal to challenge such order
under Section 254 of the Act, 1961.

11. In such case, the Appellate
Tribunal needs to adjudicate the issue
raised before it because it is the last court
of facts. The exemption under Sections 11
& 12 of the Act of 1961 can be sought
only after registration of the Trust, thus
satisfaction of the Commissioner before
registration has been given importance. In
view of above, the argument of the
learned counsel for the Revenue is that
unless such a satisfaction, as envisaged
under Section 12AA of the Act of 1961 is
recorded
by
the
Commissioner,
a
direction for its registration should not be
given by the Tribunal. As against the
aforesaid, the argument of learned counsel
for the assessee is that if Tribunal is
satisfied about the genuineness of the
activities and the object then it can direct
for registration.

12. Hon'ble the Supreme Court in
case
of
Shiv
Shakti
Cooperative
Housing
Society
versus
Swaraj
Developers and others reported in
(2003) 6 SCC 659 has considered the
scope of an Appeal although in terms of
Sections 96 and 100 of the Code of Civil
Procedure, 1908 but the basic premise
culled out from the pronouncement of
Hon'ble the Supreme Court is that an
Appeal is essentially continuation of
original proceedings which is provided
for only by statute and is not a necessary
part of procedure in an action. The
relevant paragraphs of the judgment is as
follows:-

16. An Appeal is essentially
continuation of the original proceedings
and the provisions applied at the time of
institution of the suit are to be operative
even in respect of the Appeals. That is
because there is a vested right in the
litigant to avail the remedy of an Appeal.
As was observed in K. Kapen Chako v.
Provident Investment Co. (P) Ltd. [(1977)
1 SCC 593 : AIR 1976 SC 2610] only in
cases where vested rights are involved, a
legislation has to be interpreted to mean
as one affecting such right to be
prospectively operative. The right of
Appeal is only by statute. It is (sic not a)
necessary part of the procedure in an
action, but "the right of entering a
superior court and invoking its aid and
interposition to redress the error of the
court
below.
It
seems
absurd
to
denominate this paramount right part of
the practice of the inferior Tribunal". (Per
Lord Westbury, See: Attorney General v.
Sillem [33 LJ Ex 209 : 10 LT 434 : 10
HLC 704, 724 : 11 ER 1200] , ER p.
1209.) The Appeal, strictly so called, is
"one in which the question is, whether the
order of the court from which the Appeal
is brought was right on the materials
which that court had before it" (Per Lord
Devuil Ponnammal v. Arumogam [1905
AC 383, 390] . The right of Appeal, where
it exists, is a matter of substance and not
of procedure (Colonial Sugar Refining
Co. v. Irving [1905 AC 369 : (1904-07)
All ER Rep Ext 1620 : 92 LT 738 (PC)]
)."

"17.
Right
of
Appeal
is
statutory. Right of Appeal inhered in no
one. When conferred by statute it becomes
a vested right. In this regard there is
essential distinction between right of
2 All. Commissioner of Income Tax Exemption U.P. State Cons. & Infra Vs M/s Reham
 Foundation Kandhari Lane Lal Bagh Lucknow

1157
Appeal and right of suit. Where there is
inherent right in every person to file a suit
and for its maintainability it requires no
authority of law, Appeal requires so. As
was observed in State of Kerala v. K.M.
Charia Abdulla and Co. [AIR 1965 SC
1585] the distinction between right of
Appeal
and
revision
is
based
on
differences
implicit
in
the
two
expressions. An Appeal is continuation of
the proceedings; in effect the entire
proceedings are before the Appellate
Authority and it has the power to review
the
evidence
subject
to
statutory
limitations prescribed. But in the case of
revision, whatever powers the revisional
authority may or may not have, it has no
power to review the evidence, unless the
statute expressly confers on it that power.
It was noted by the four Judge Bench in
Hari Shankar v. Rao Girdhari Lal
Chowdhury [AIR 1963 SC 698] that the
distinction between an Appeal and a
revision is a real one. A right of Appeal
carries with it a right of rehearing on law
as well as fact, unless the statute
conferring the right of Appeal limits the
rehearing in some way, as has been done
in second Appeals arising under the
Code. The power of hearing revision is
generally given to a superior court so that
it may satisfy itself that a particular case
has been decided according to law.
Reference was made to Section 115 of the
Code to hold that the High Court's
powers under the said provision are
limited to certain particular categories of
cases. The right there is confined to
jurisdiction and jurisdiction alone."

13. With regard to interpretation of
statute, it is settled law that statute is an
edict of the legislature and where the
words of statute are clear without any
ambiguity and the intention of the
legislature is clearly conveyed, there is no
scope for the court to innovate or take
upon itself the task of altering the
statutory provisions by breathing into the
provisions, words which have not been
expressly incorporated by the legislature.

14. It is only in case where the
words of statute are ambiguous or a
reading of which clearly indicates that it
is a case of 'casus omissus' that the court
can interpret the provisions incorporated
in statute. Hon'ble the Supreme court
referring to various pronouncements in
the
case
of
Bharat
Aluminium
Company versus Kaiser Aluminium
Technical Services Inc. reported in
(2012) 9 SCC 552 has held that the court
must proceed on the footing that the
legislature intended what it has said. Even
where there is a 'casus omissus' it is for
the others than the courts to remedy the
defect. The relevant paragraph in the case
of Bharat Aluminium Company (supra) is
as follows:-

"65. Mr Sorabjee has also
rightly pointed out the observations made
by Lord Diplock in Duport Steels Ltd.
[(1980) 1 WLR 142 : (1980) 1 All ER 529
(HL)] In the aforesaid judgment, the
House of Lords disapproved the approach
adopted by the Court of Appeal in
discerning the intention of the legislature;
it is observed that: (WLR p. 157 C-D)

"... the role of the judiciary is
confined to ascertaining from the words
that
Parliament
has
approved
as
expressing
its
intention
what
that
intention was, and to giving effect to it.
Where the meaning of the statutory words
is plain and unambiguous it is not for the
Judges to invent fancied ambiguities as an
1158 INDIAN LAW REPORTS ALLAHABAD SERIES
excuse for failing to give effect to its plain
meaning
because
they
themselves
consider that the consequences of doing
so would be inexpedient, or even unjust or
immoral. In controversial matters such as
are involved in industrial relations there
is room for differences of opinion as to
what is expedient, what is just and what is
morally
justifiable.
Under
our
Constitution it is Parliament's opinion on
these matters that is paramount."

 (emphasis supplied)

In the same judgment, it is
further observed: (WLR p. 157 F)

"... But if this be the case it is
for Parliament, not for the judiciary, to
decide whether any changes should be
made to the law as stated in the Acts...."

(emphasis supplied)"

15. With regard to taxing statute, it
has been held that the courts have to apply
strict rule of interpretation. When the
competent legislature mandates taxing
certain person/certain objects in certain
circumstances,
it
can
not
be
expanded/interpreted to include those,
which
were
not
intended
by
the
legislature. The aforesaid has been held
by Hon'ble the Supreme Court in the case
of Commissioner of Customs (Import)
Mumbai versus Dilip Kumar and
Company and others reported in (2018)
9 SCC 1. The relevant paragraphs in the
aforesaid judgment of Dilip Kumar and
Company and others(supra) is as follows:-

"21. The well-settled principle
is that when the words in a statute are
clear, plain and unambiguous and only
one meaning can be inferred, the courts
are bound to give effect to the said
meaning irrespective of consequences. If
the words in the statute are plain and
unambiguous, it becomes necessary to
expound those words in their natural and
ordinary sense. The words used declare
the intention of the legislature."

"24.
In
construing
penal
statutes and taxation statutes, the Court
has to apply strict rule of interpretation.
The penal statute which tends to deprive a
person of right to life and liberty has to be
given strict interpretation or else many
innocents
might
become
victims
of
discretionary decision-making. Insofar as
taxation statutes are concerned, Article
265 of the Constitution [ "265. Taxes not
to be imposed save by authority of law.--
No tax shall be levied or collected except
by authority of law."] prohibits the State
from extracting tax from the citizens
without authority of law. It is axiomatic
that taxation statute has to be interpreted
strictly because the State cannot at their
whims and fancies burden the citizens
without authority of law. In other words,
when the competent Legislature mandates
taxing certain persons/certain objects in
certain circumstances, it cannot be
expanded/interpreted to include those,
which
were
not
intended
by
the
legislature."

"25. At the outset, we must
clarify the position of "plain meaning rule
or clear and unambiguous rule" with
respect to tax law. "The plain meaning
rule" suggests that when the language in
the statute is plain and unambiguous, the
court has to read and understand the
plain language as such, and there is no
scope for any interpretation. This salutary
maxim flows from the phrase "cum
inverbis nulla ambiguitas est, non debet
admitti voluntatis quaestio". Following
such maxim, the courts sometimes have
made strict interpretation subordinate to
the plain meaning rule [Mangalore
Chemicals and Fertilisers Ltd. v. CCT,
1992 Supp (1) SCC 21] , though strict
2 All. Commissioner of Income Tax Exemption U.P. State Cons. & Infra Vs M/s Reham
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1159
interpretation is used in the precise sense.
To say that strict interpretation involves
plain reading of the statute and to say that
one has to utilise strict interpretation in
the
event
of
ambiguity
is
selfcontradictory."

16. The principles with regard to
'casus omissus' and its implementation
have also been dealt with by Hon'ble the
Supreme Court in the case of Shiv Shakti
Cooperative Housing Society (supra) in
which the relevant paragraphs are as
follows:-

"19. It is a well-settled principle
in law that the court cannot read anything
into a statutory provision which is plain
and unambiguous. A statute is an edict of
the legislature. The language employed in
a statute is the determinative factor of
legislative intent. Words and phrases are
symbols that stimulate mental references
to referents. The object of interpreting a
statute is to ascertain the intention of the
legislature enacting it. (See Institute of
Chartered Accountants of India v. Price
Waterhouse [(1997) 6 SCC 312 : AIR
1998 SC 74] .) The intention of the
legislature is primarily to be gathered
from the language used, which means that
attention should be paid to what has been
said as also to what has not been said. As
a consequence, a construction which
requires for its support, addition or
substitution of words or which results in
rejection of words as meaningless has to
be avoided. As observed in Crawford v.
Spooner [(1846) 6 Moo PCC 1 : 4 MIA
179] courts cannot aid the legislatures'
defective phrasing of an Act, we cannot
add or mend, and by construction make
up deficiencies which are left there. (See
State of Gujarat v. Dilipbhai Nathjibhai
Patel [(1998) 3 SCC 234 : 1998 SCC
(Cri) 737 : JT (1998) 2 SC 253] .) It is
contrary to all rules of construction to
read words into an Act unless it is
absolutely necessary to do so. [See Stock
v. Frank Jones (Tipton) Ltd. [(1978) 1 All
ER 948 : (1978) 1 WLR 231 (HL)] ] Rules
of interpretation do not permit courts to
do so, unless the provision as it stands is
meaningless or of a doubtful meaning.
Courts are not entitled to read words into
an Act of Parliament unless clear reason
for it is to be found within the four
corners of the Act itself. (Per Lord
Loreburn, L.C. in Vickers Sons and
Maxim Ltd. v. Evans [1910 AC 444 : 1910
WN 161 (HL)] , quoted in Jumma Masjid
v. Kodimaniandra Deviah [AIR 1962 SC
847] .)"

"23.
Two
principles
of
construction -- one relating to casus
omissus and the other in regard to
reading the statute as a whole -- appear
to be well settled. Under the first principle
a casus omissus cannot be supplied by the
court except in the case of clear necessity
and when reason for it is found in the four
corners of the statute itself but at the same
time a casus omissus should not be
readily inferred and for that purpose all
the parts of a statute or section must be
construed together and every clause of a
section
should
be
construed
with
reference to the context and other clauses
thereof so that the construction to be put
on a particular provision makes a
consistent enactment of the whole statute.
This would be more so if literal
construction of a particular clause leads
to manifestly absurd or anomalous results
which could not have been intended by
the legislature. "An intention to produce
an
unreasonable
result",
said
Danckwerts,
L.J.
in
Artemiou
v.
1160 INDIAN LAW REPORTS ALLAHABAD SERIES
Procopiou [(1966) 1 QB 878 : (1965) 3
All ER 539 : (1965) 3 WLR 1011 (CA)]
(All ER p. 544 I), "is not to be imputed to
a
statute
if
there
is
some
other
construction available". Where to apply
words literally would "defeat the obvious
intention of the legislation and produce a
wholly unreasonable result", we must "do
some violence to the words" and so
achieve
that
obvious
intention
and
produce a rational construction. Per Lord
Reid in Luke v. IRC [1963 AC 557 :
(1963) 1 All ER 655 : (1963) 2 WLR 559
(HL)] where at AC p. 577 (All ER p. 664
I) he also observed: "This is not a new
problem, though our standard of drafting
is such that it rarely emerges."

17. A conspectus of the aforesaid
judgments make it amply clear that
statutory interpretation particularly with
regard to taxing statutes has to be strict
and
only
in
accordance
with
the
unambiguous words used in the statute.
The intention of the legislature in
incorporating or leaving out certain words
is necessarily required to be seen.

18. The words 'as it thinks fit' used
in relation to the powers of the Appellate
Tribunal exercisable under Section 254(1)
of the Act, 1961 is of the widest
amplitude. The said expression confers a
very wide jurisdiction enabling the
Appellate authority to take an entirely
different view on the same set of facts.

19. The terminology ' as it thinks fit'
in relation to the powers of the Appellate
authority
have
been
considered
by
Hon'ble the Supreme Court in the case of
Babu
Lal
Nagar
versus
Shree
Synthetics Limited and others reported
in 1984 (supp) SCC 128. The relevant
paragraph of the judgment is as follows:

"16. Section 66(1) of the Act
provides
that
the
Industrial
Court
omitting the portion not relevant for the
present purpose, may call for and
examine the record of such case and pass
order in reference thereto as it thinks fit.
If the Industrial Court has the jurisdiction
to pass any order in reference to a case
called for by it as it thinks fit, obviously it
can come to a conclusion on the same set
of facts different from the one to which the
Labour Court had arrived. It was
however urged that this jurisdiction of
wide amplitude has been cut down by the
proviso which provides that the Industrial
Court shall not vary or reverse any order
of the Labour Court under Section 66(1)
unless -- (i) it is satisfied that the Labour
Court has -- (a) exercised jurisdiction not
vested in it by law; or (b) failed to
exercise a jurisdiction so vested; or (c)
acted in exercise of its jurisdiction
illegally or with material irregularity. It
was
urged
that
these
clauses
so
circumscribe
and
cut
down
the
jurisdiction of the Industrial Court under
Section 66 as to be on par with Section
115 of the Code of Civil Procedure. The
main part of Section 61 (sic 66) clearly
spells out the jurisdiction of the Industrial
Court to pass any order in reference to
the case brought before it as it thinks fit.
The expression "as it thinks fit" confers a
very wide jurisdiction enabling it to take
an entirely different view on the same set
of facts. The expression "as it thinks fit"
has the same connotation, unless context
otherwise indicates, "as he deems fit" and
the latter expression was interpreted by
this Court in Raja Ram Mahadev
Paranjype v. Aba Maruti Mali [AIR 1962
SC 753 : 1962 Supp (1) SCR 739] to
mean to make an order in terms of the
statute, an order which would give effect
to a right which the Act has elsewhere
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1161
conferred.
Is
this
jurisdiction
so
circumscribed as to bring it on par with
Section 115 of the Code of Civil Procedure?
Proviso does cut down the ambit of the
main provision but it cannot be interpreted
to denude the main provision of any efficacy
and reduce it to a paper provision. Both
must be so interpreted as to permit
interference which if not undertaken there
would be miscarriage of justice. Sub-clause
(c) of the first proviso to Section 66(1) will
permit the Industrial Court to interfere with
the order made by the Labour Court, if the
Labour Court has acted with material
irregularity in disposal of the dispute before
it. If the finding recorded by the Labour
Court is such to which no reasonable man
can arrive, obviously, the Industrial Court
in exercise of its revisional jurisdiction
would be entitled to interfere with the same
even if patent jurisdictional error is not
pointed out."

20. Upon a perusal of the powers of
the Appellate authority as indicated in
section 254(1) of the Act, 1961, it can be
seen that the widest jurisdiction has been
conferred upon the Appellate authority in
the wisdom of the legislature. The said
power has not been proscribed in any
manner whatsoever.

21. Hon'ble the Supreme Court in
the case of Clariant International
Limited and another versus Securities
and Exchange Board of India reported
in (2004) 8 SCC 524 has held that once
the jurisdiction of the Appellate authority
is not fettered by statute, it exercises all
the jurisdiction. It has also been held that
the limits to jurisdiction of the Appellate
authority
would
have
been
stated
explicitly in the statute had that been the
intention of legislature.

The relevant paragraphs of the
judgment
in
the
case
of
Clariant
International Limited (supra) are as
follows;-

"73. Had the intention of
Parliament been to limit the jurisdiction
of the Tribunal, it could say so explicitly
as it has been done in terms of Section 15Z of the Act whereby the jurisdiction of
this Court to hear the Appeal is limited to
the question of law."

"74. The jurisdiction of the
Appellate Authority under the Act is not in
any way fettered by the statute and, thus,
it exercises all the jurisdiction as that of
the
Board.
It
can
exercise
its
discretionary jurisdiction in the same
manner as the Board."

22. In view of the aforesaid
judgments of Hon'ble the Supreme Court,
it is clearly evident that the provisions of
the Act 1961 have to be interpreted
strictly in accordance with what it
explicitly states. Once the legislature in its
wisdom has not fettered the jurisdiction of
the Appellate Tribunal, it would not be
appropriate for the courts to put fetters
upon such jurisdiction since doing so
would amount to doing violence to the
specific provisions of statute.

23. A perusal of Section 254 of the
Act of 1961 shows that the Appellate
Tribunal is given power to pass such
orders, as it thinks fit. The powers given
under Section 254 of the Act of 1961 is to
be read along with other provisions of the
Act. Section 12AA of the Act of 1961
requires
satisfaction
about
the
genuineness of the activities and the
objects of a Trust before its registration
by the Commissioner. The arguments of
learned counsel for Revenue in reference
1162 INDIAN LAW REPORTS ALLAHABAD SERIES
to the requirement of satisfaction on the
genuineness of activities of a Trust is to
be exercised by the Commissioner and
that the Tribunal should not direct
registration of Trust unless satisfaction, as
envisaged under Section 12 (AA) of the
Act, 1961 is recorded, is only partly
correct.

24. Upon consideration of the
judgments referred to herein above, we
are of the considered opinion that in case
where the Commissioner has refused to
accept the application for registration of
Trust after recording its finding on the
basis of material on record before him
holding that the activities and object of
the Trust are not genuine and the
Appellate Tribunal on the basis of the
same material on record comes to the
conclusion
that
the
order
of
the
Commissioner is perverse since it has
been passed ignoring, misconstruing or
misinterpreting such evidence, then it can
direct registration of the Trust without
remanding
the
matter
to
the
Commissioner.

25. Remand of the case to the
Commissioner in the said circumstance
after recording of satisfaction by the
Appellate Tribunal about the genuineness
of objects and activities of the Trust, on
the basis of material on record, would be
an
empty
formality
because
the
Commissioner in such a case can not go
against the specific finding recorded by
the Appellate Tribunal.

26. In view of the unfettered power
of the Appellate Tribunal in terms of
section 254 (1) of the Act, 1961 the
Tribunal can very well record its
satisfaction on the genuineness of the
activities and object of the Trust and can
very well direct registration of the Trust
without
remand
of
case
to
the
Commissioner in case such satisfaction is
recorded on the basis of documents and
material already available on record at the
stage of examination by Commissioner.

27. However it would be a different
matter where the Appellate Tribunal
records such satisfaction on the basis of
material or documentary evidence which
was
not
available
before
the
Commissioner
while
exercising
his
powers under Section 12 (AA) of the Act,
1961, which is our opinion would require
remand.

28. Remand to the Commissioner
can also be affected in a case where the
Commissioner rejects the application on a
technical ground without recording its
opinion on facts or genuineness of the
activities and object of the Trust but the
Tribunal finds ground for rejection on
such technical ground thereby reopening
the issue of recording satisfaction in terms
of Section 12 (AA) of the Act, 1961.

29.